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PRELIMINARY RESULTS 2003

PRELIMINARY RESULTS 2003. Holiday break plc PRELIMINARY RESULTS 2003. Results overview Financial review Divisions - performance, prospects and strategy Group strategy and prospects. Preliminary Results 2003 CHAIRMAN’S STATEMENT (1).

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PRELIMINARY RESULTS 2003

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  1. PRELIMINARY RESULTS 2003

  2. Holidaybreak plcPRELIMINARY RESULTS 2003 • Results overview • Financial review • Divisions - performance, prospects and strategy • Group strategy and prospects

  3. Preliminary Results 2003CHAIRMAN’S STATEMENT (1) • Robust performance - well placed for opportunities ahead • Turnover : £259.5m • Headline Profit Before Tax : £27.9m (+3.1%) • Headline EPS : 44.5p (+4.4%) • Dividend : 22p (+10%) • Generated £9m net cash

  4. 2003 in RetrospectTERRORIST ACTIVITY

  5. 2003 in RetrospectIRAQ WAR

  6. 2003 in RetrospectSARS

  7. 2003 in RetrospectFINANCIAL MARKET WEAKNESSES

  8. 2003 in RetrospectLONG HOT SUMMER

  9. Preliminary Results 2003CHAIRMAN’S STATEMENT (2) • Divisional performance : - Camping recovered strongly from weak early markets - Another outstanding year for Hotel Breaks - Adventure again held back by geopolitical events • Encouraging start to 2004 from Hotel Breaks and Adventure • Well placed to meet challenges - longer term prospects excellent

  10. All stated before goodwill and exceptional costs Preliminary Results 2003PROFIT & LOSS ACCOUNT

  11. All stated before goodwill and exceptional costs Preliminary Results 2003DIVISIONAL RESULTS

  12. Preliminary Results 2003EXCEPTIONAL COSTS • Reorganisation costs relating to Eurositesacquisition £2.7m - Assets written-off £0.7m - Rebranding and resiting mobile-homes £0.6m - Redundancies £0.6m • Advisers fees relating to aborted acquisitions £0.4m • Write-down of fixed asset investments £0.6m

  13. Preliminary Results 2003BALANCE SHEET (1)

  14. Preliminary Results 2003BALANCE SHEET (2) • Fixed Asset Investments written down by £0.6m • Prior year adjustment re goodwill previouslywritten-off - reduces net assets at 1 October 2001 by £3.6m • Net debt reduced to £23.4m - gearing 61.3% (2002 : 96.7%) • Goodwill on Bridge acquisition impaired

  15. Preliminary Results 2003CAPITAL EXPENDITURE & DISPOSALS (1)

  16. Preliminary Results 2003CAPITAL EXPENDITURE & DISPOSALS (2) • Total capex 40% higher than 2002 • Net spend on mobile-homes £11.1m - increase capacity by 5.5% - replacement expenditure £10.5m • Mobiles continue to achieve book value on disposal - disposal proceeds £4.3m

  17. Preliminary Results 2003MOVEMENT IN NET DEBT

  18. Preliminary Results 2003CASH FLOW • Net debt reduced by £9.0m • Capex largely financed through new HP (57%) • Capex requirement 2004 & beyond • Interest cover 6.5 times (2002 : 12.3) • Currency and interest hedges in place • Headroom in bank facilities

  19. Holidaybreak plcBUSINESS STRENGTHS • Market leaders • Service and Product Quality • Multi-channel distribution • Healthy margins - well above travel industry norms • Flexible cost structures and products • Strong cash generation

  20. Holidaybreak plcGROUP STRATEGY • All divisions will generate organic growth • Exploit and adapt to key consumer and supply side trends • Active product and distribution development programmes • Small ‘bolt-on’ acquisitions to act as a catalyst and open up new opportunities • Larger scale ‘fourth leg’ acquisition also a possibility - at right value - not mainstream package tour operating

  21. Camping2003 PERFORMANCE • Weak early market, slow start - strong recovery after end of Iraq war • Like for like sales (including Eurosites) 6% down year on year (capacity : -4%) • Exceptional summer - may have deterred some late bookings - high customer satisfaction levels • Eurosites integration went smoothly - £1.6m synergies exceeded expectations - year on year bookings performance weaker than Eurocamp and Keycamp

  22. CampingTRADING AND PROSPECTS • Mainstream market summer 2004 bookings up to 30% down • Eurosites now integrated into Eurocamp and Keycamp • Capacity : -8% planned • Sales to date : -20% like for like • New Year bookings expected to be much stronger than equivalent ‘war build up’ period in 2003

  23. CampingMANAGEMENT • Current MD Jim Crew will retire in the New Year once successor appointed • Recruitment process already well advanced • Key appointment - Core business of the Group and biggest profits generator - Will also sit on plc Board

  24. CampingSTRATEGY • Sector resilient with high levels of customer loyalty to both brands and holiday type • Holidays must be attractive and good value - aim to deliver consistently high quality product and service standards • Growth drivers : - Trends from lower priced, lower margin tents to higher priced, higher margin mobile-homes plus upgrades within mobile-home range - Increased penetration of ‘mainstream’ self-catering markets - Greater capacity and support for premium Eurocamp and Keycamp brands - Easycamp : 2003 launch of ‘no frills’ product in Holland/Germany

  25. Hotel Breaks2003 PERFORMANCE • Favourable market conditions - demand and supply sides • Growth through all main distribution channels - high street agents (50%), internet (25%) and direct (20%) • Acquisitions of Bridge Britain and London Travel Service from MyTravel in March 2003 • European Cities 190% year on year - now 9% of total sales

  26. Hotel BreaksTRADING AND PROSPECTS • 2004 sales 37% up year on year • Internet still growing strongly • Continuing benefits of Bridge acquisition • Official accommodation provider (web and telephone) for Visit London campaign (ex-LTB) • European Beach Breaks programme

  27. Hotel BreaksSTRATEGY • Favourable consumer trends • Simple business model - resilient, cash generative and very flexible cost base • Multi-channel distribution - internet a major growth driver but high street agents still a key element in distribution mix • Constant search for new distribution opportunities and product extensions - further small bolt-on acquisitions possible

  28. Adventure2003 PERFORMANCE • Good first quarter but trading deteriorated rapidly as Iraq war approached • SARS, terrorist incidents (Bali, Morocco) and threats (East Africa) and regional conflicts (India/Pakistan, Nepal) also had a negative impact • Regions not directly affected performed well e.g. South America, Europe and South Africa • Load factors and gross margins maintained

  29. AdventureTRADING AND PROSPECTS • 2004 sales 8% up year on year • Sales rebound in regions negatively affected in 2003 e.g. India, Thailand, Egypt (important forRegalDive) • Progress in various areas - New products (Adventure Breaks, Family, Cycle, Rail) - Brand strategy refocused - Internal systems and organisation • Cautiously optimistic

  30. AdventureSTRATEGY

  31. Distribution Fragmenting Low cost airlines Internet TRAVEL Rigid, vertically integrated tour operating model under threat Later Bookings Consumer holiday trends - shorter more frequent - more independent/tailor made/flexible - holidays with purpose Strategy - Travel Industry TrendsKEY STRUCTURAL INFLUENCES

  32. Positive for Camping and Hotel Breaks. No Low-costAirlines impact on Adventure All Holidaybreak businesses use multi-channel distribution - not over reliant on high street agents DistributionFragmenting Complements existing distribution channels for specialist holiday businesses. Key growth driver for hotel breaks Internet Camping still an early booking business (40%pre-Christmas) - family market still has to plan Later Bookings Holidaybreak businesses give consumerschoice, flexibility and alternatives to standardpackages Consumer Trends Vertical Integration Holidaybreak businesses not verticallyintegrated Environmental ChangesIMPACT ON HOLIDAYBREAK

  33. ConsumerConfidence GeopoliticalUncertainty TRAVEL Exceptional UKsummer weather Strengthening EuroWeakening Dollar ProspectsKEY CURRENT ISSUES AND EVENTS

  34. Consumer Confidence Still strong in UK. Weaker in main Europeanmarkets for Camping Geopolitical Uncertainty Camping and Hotel Breaks relatively ‘safe’holiday choices. Adventure has exposurebut many alternative destinations. Euro still ‘mid-range’ in historical terms.Natural hedge for Camping due to Eurorevenues. Weak dollar positive forAdventure. Strengthening Euro Weakening Dollar Exceptional UK Summer Weather Should benefit Camping and Hotel Breaksin 2004. ProspectsCURRENT ISSUES AND EVENTS

  35. Preliminary Results 2003OVERVIEW AND SUMMARY • Strong cash generative businesses - Resilient performance in 2003 - Well placed to benefit from holiday sector brands • Strategy of seeking steady organic growth supplemented by appropriate acquisitions at right value (debt capacity available) • Record shows 10-15% EPS and dividend growth. This remains our aspiration • Encouraging start to 2004 by Hotel Breaks and Adventure. Post New Year bookings a key indicator for Camping

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